India's Feature Phone Sector Braces for Reliance Jios' Entry

The mobile service disruptor is launching a 4G-capable feature phone

Although India is thought of as one of the largest emerging markets for smartphone use, feature phones still play a prominent role in the country’s mobile device sector. In fact, research from Gartner showed that feature phones still accounted for half of all mobile phone sales in the country in Q4 2016.

However, the number of feature phones shipped in India is steadily dropping as smartphones maintain a steady march into consumers’ hands. According to International Data Corporation (IDC), feature phone shipments in India fell 9.4% year over year to 136.1 million in 2016.

But feature phones are still hanging on in India thanks to their low cost; many are still substantially cheaper than even low-end smartphones. In addition, these once basic handsets now offer many of the same features as smartphones, such as front-facing cameras and additional media storage capabilities, while surpassing the battery life of smartphones by a wide margin.

Now Reliance Jio, a telecom that upended the mobile broadband sector last fall by offering 4G data plans at substantially cheaper prices than its competitors, is looking to target feature phone users.

Last week the company announced the launch of the JioPhone, a 4G-capable feature phone that is effectively being offered for free, with the caveat that customers will have to plunk down a deposit of INR1,500 (about $22) that’s refundable after three years. Voice calls and texting will be free on the device, while unlimited data plans will cost INR153 ($2.27) per month. For those unable to afford even that, a two-day data plan and a weekly data plan will also be available.

The JioPhone boasts features commonly found on smartphones, including the ability to browse the web, watch videos, run apps and accept voice commands. However, it will be limited to a 2.4-inch screen and a physical alphanumeric keypad.

While it’s expected that India’s major feature phone manufacturers, such as Micromax and Intex, will take a hit from the launch of the device, Reliance Jio is not really interested in starting a manufacturing business. Construction and assembly of the phones will be outsourced to established manufacturers.

Instead, Reliance Jio’s goal is to funnel existing feature phone users onto its data plans, with the hope that they will remain loyal when they upgrade to smartphones. eMarketer predicts that the number of smartphone users in India will rise from 267.1 million this year to 409.8 million by 2021.

Reliance Jio has already experienced tremendous success drawing customers to its smartphone-oriented 4G data plans. The company claims to have gained more than 125 million subscribers since its launch, and it also credits a sharp increase in mobile data consumption in India to its cheap service plans.

Reliance Jio has already done a lot to hasten the development of the mobile broadband market. Faster networks and cheaper prices will do more to drive the development of India’s digital economy than any infrastructure plan from the government ever could. Now the company is hoping to extend its winning streak into the feature phone market.